Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI)

A biopharmaceutical company that acquires and advances a diversified portfolio of drug candidates, with a focus on oncology, urology and other critical health challenges for which there are few other treatment options.

Spectrum’s stock price collapsed after a court ruling in February that invalidated the company's patent claims on cancer drug Fusilev. Many assume that the company ‘ain’t got nothin’ left’. However, Spectrum has two other drugs in development: poziotinib for breast cancer and SPI-2012 for chemotherapy-induced neutropenia. Both have the long-term blockbuster potential. Spectrum announced positive Phase 2 results for SPI-2012 in March at its analyst day. It will take while to see if these new drugs will pan out, but I think it is worth a small position at these prices.

Highly volatile spec, but has enough innovations in the pipeline that its swings are ratcheting upward. Might get bought as well. Anyhow, it's paid for my aspirin for the occasional headaches it's given me...!

It looks like I've only got six slots left for CAPS picks and I'm going to blow one of them on Spectrum, a company I've been critical of in the past but could be turning a corner. After several quarters of decline in Fusilev revenues, there was a sharp uptick last quarter which may indicate that Fusilev has acquired a foothold from which they won't be easily displaced by the reappearance of generic leucovorin. Zevalin and Folotyn are performing respectably, and pivotal data for captisol-enabled melphalan in Q2 could provide further lift. There will also likely be a PDUFA for Belinostat in late 2014. Marqibo and apaziquone are the wild cards in the mix, but there is certainly potential for positive catalysts with phase III trials in 2014.

A former high flyer, Spectrum was anemic in the biopharma bull market of 2013. Raj got his bonus in 2012 and seems to be resting on his laurels for now, but I believe eventually the potential here will lift the stock even in the absence of self-promotion.

With two profitable drugs increasing sales each quarter and three more attractive drugs expected to reach approval this year, SPPI is one of the most attractive biotech stocks out there. Profits should rise each quarter as well as stock price, and the stock is a good acquisition candidate.